Performance Appraisal Defined

Formal system of review and evaluation of individual or team task performance

Often negative, disliked activity that seems to elude mastery

Appraisal Data Is Needed For...

Assessment of current employee performance
are performance standards being met?

Training needs
what does the employee need to learn in order to improve current work performance?

Career planning and development

assessing an employees strengths and weaknesses to determine advancement

Compensation programs
provides a basis for rational decisions regarding pay adjustments (raises and bonuses)

Internal employee relations

used for decisions in several areas of internal employee relations, including promotion, demotion, termination, layoff, and transfer (transfers, layoffs, terminations)

Recruitment and selection

generates data to validate selection criteria

Human resource planning

assessment data is helpful in building replacement or succession charts

Performance Appraisal Process

External Environment Internal Environment

Identify Specific Performance Appraisal Goals

Establish Performance Criteria (Standards) and Communicate Them To Employees Examine Work Performed Appraise the Results Discuss Appraisal with Employee

PERFORMANCE APPRAISAL REPONSIBILITY

HUMAN RESOURCE DEPARTMENT Designs the performance appraisal system Establishes and monitors a reporting system Trains managers in how to conduct appraisals Safeguards performance appraisal records
MANAGERS & SUPERVISORS Evaluates employee performance Completes the appraisal documents and forms Reviews appraisals with employees

WHAT IS THE PURPOSE OF THE APPRAISAL?

JUDGMENTAL To make administrative decisions (To justify rewards given for performance) DEVELOPMENTAL To improve performance (To provide feedback for learning and work improvement) You cannot accomplish both purposes equally well with a single appraisal system. Some appraisal tools are better at generating good feedback than providing a consistent rationale for a judgment. Similarly, negative feedback generated by judgmental appraisals is unlikely to motivate the employee to work harder to improve performance. If both appraisal objectives are important, separate assessment systems should be created.

HOW OFTEN SHOULD APPRAISALS BE DONE?

ANNUALLY (Once a year) SEMI-ANNUALLY (every 6 months) QUARTERLY (every 3 months) MONTHLY CONTINUOUSLY

WHEN SHOULD APPRAISALS BE DONE?

DO ALL THE APPRAISALS AT ONE TIME A lot of work to do at one time..overworks the supervisor All appraisals cover the same time period DO EACH ONE ON THE EMPLOYEES ANNIVERSARY The appraisal process is spread over the whole year Appraisals are not comparablethey dont cover the same time period

WHO SHOULD CONDUCT THE APPRAISAL?

IMMEDIATE SUPERVISOR SUBORDINATES COWORKERS (Peers) OUTSIDERS

Customers Constituents Consultants

SELF-APPRAISAL GROUPS or TEAMS 360 degree appraisal from above & below; insiders & outsiders 720 degree appraisal a second layer above and below

AN APPRAISER MUST:

BE AWARE OF THE OBJECTIVES & REQUIREMENTS OF THE EMPLOYEES JOB

HAVE THE OPPORTUNITY TO FREQUENTLY OBSERVE THE EMPLOYEE OR HIS/HER WORK BE CAPABLE OF EVALUATING AND RECORDING OBSERVED WORK BEHAVIOR OR PERFORMANCE AVOID OR MINIMIZE POTENTIAL APPRAISAL ERRORS AND BIAS

THE FUNDAMENTAL ATTRIBUTION ERROR

POOR WORK PERFORMANCE BY OTHERS THEIR POOR WORK PERFORMANCE IS CAUSED BY PERSONAL FACTORS (No effort, laziness, they didnt try)
THE PERSON IS THE REASON FOR FAILURE

MY POOR WORK PERFORMANCE MY POOR WORK PERFORMANCE IS DUE TO SITUATIONAL FACTORS BEYOND MY CONTROL (Poor support, uncooperative coworkers, unforeseen events)
THE ENVIRONMENT IS THE REASON FOR FAILURE

Note the self-serving biaswe are not responsible for our failures, but others are responsible for theirs!

ATTRIBUTION THEORY
KELLEY 73

IS THE CAUSE OF BEHAVIOR SEEN AS INTERNAL (PERSONAL) OR EXTERNAL (SITUATIONAL)? WE LOOK FOR THREE INDICATORS TO DECIDE.

DISTINCTIVE
IS THIS PERSONS PERFORMANCE DIFFERENT ON OTHER TASKS AND IN OTHER SITUATIONS? (YES = EXTERNAL, NO = INTERNAL)

CONSISTENT
OVER TIME, IS THERE A CHANGE IN BEHAVIOR OR RESULTS ON THIS TASK BY THIS PERSON? (YES = EXTERNAL, NO = INTERNAL)

CONSENSUS
DO OTHERS PERFORM OR BEHAVE SIMILARLY WHEN ASSIGNED A SIMILAR POSITION OR TASK? (YES = EXTERNAL, NO = INTERNAL) Consistent Yes answers lead us to external attributions Environmentally caused No answers lead us to internal attributions -- The person is responsible

ATTRIBUTIONAL MODEL OF FAILURE

INTERNAL ATTRIBUTION Person Responsible?
LACK OF ABILITY LACK OF EFFORT

EXTERNAL ATTRIBUTION Situation Responsible?

DIFFICULT TASK BAD LUCK

ENLIGHTENED SUPERVISOR RESPONSE

LACKS ABILITY LACKS EFFORT DIFFICULT TASK BAD LUCK ----Training or Transfer Reprimand or Motivational Strategy Job Redesign Sympathy and Support

APPRAISAL ERRORS
FUNDAMENTAL ATTRIBUTION ERROR HALO & HORN EFFECTS RECENCY EFFECT CONTRAST EFFECT STATUS EFFECT PROJECTION EVALUATOR PREJUDICE DISTRIBUTION (RANGE) ERRORS Leniency, Strictness, or Central Tendency USE OF INVALID APPRAISAL MEASURES

Problems in Performance Appraisal

Appraiser discomfort
Lack of objectivity Halo/horn error Leniency/strictness Central tendency Recent behavior bias Personal bias Manipulating the evaluation Employee anxiety

Appraiser Discomfort
Performance appraisal process cuts into managers time Experience can be unpleasant when employee has not performed well

Lack of Objectivity
In rating scales method, commonly used factors such as attitude, appearance, and personality are difficult to measure Factors may have little to do with employees job performance Employee appraisal based primarily on personal characteristics may place evaluator and company in untenable positions

Halo/Horn Error
Halo error - Occurs when manager generalizes one positive performance feature or incident to all aspects of employee performance resulting in higher rating Horn error - Evaluation error occurs when manager generalizes one negative performance feature or incident to all aspects of employee performance resulting in lower rating

Leniency/Strictness
Leniency - Giving undeserved high ratings Strictness - Being unduly critical of employees work performance Worst situation is when firm has both lenient and strict managers and does nothing to level inequities

Central Tendency
Error occurs when employees are incorrectly rated near average or middle of scale May be encouraged by some rating scale systems requiring evaluator to justify in writing extremely high or extremely low ratings

Recent Behavior Bias

Employees behavior often improves and productivity tends to rise several days or weeks before scheduled evaluation Only natural for rater to remember recent behavior more clearly than actions from more distant past Maintaining records of performance

Personal Bias (Stereotyping)

Managers allow individual differences such as gender, race or age to affect ratings they give Effects of cultural bias, or stereotyping, can influence appraisals Other factors Example: mild-mannered employees may be appraised more harshly simply because they do not seriously object to results

Manipulating the Evaluation

Sometimes, managers control virtually every aspect of appraisal process and are in position to manipulate system Example: Want to give pay raise to certain employee. Supervisor may give employee a undeserved high performance evaluation

Employee Anxiety
Evaluation process may create anxiety for appraised employee Opportunities for promotion, better work assignments, and increased compensation may hinge on results

Reasons for Intentionally Inflating Ratings

Believe accurate ratings would damage subordinates motivation and performance. Improve employees eligibility for merit raises. Avoid airing departments dirty laundry. Avoid creating negative permanent record that might haunt employee in future. Protect good workers whose performance suffered because of personal problems. Reward employees displaying great effort even when results were relatively low. Avoid confrontation with hard-to-manage employees. Promote a poor or disliked employee up and out of department.

Reasons for Intentionally Lowering Ratings

Scare better performance out of employee. Punish difficult or rebellious employee. Encourage problem employee to quit. Create strong record to justify planned firing. Minimize amount of merit increase a subordinate receives. Comply with organizational edict that discourages managers from giving high ratings.

Establishing Performance Criteria (Standards)

Traits Behaviors Competencies Goal Achievement Improvement Potential

THREE FOCAL POINTS OF APPRAISAL

1. PERSONAL TRAITS AND CHARACTERISTICS + inexpensive to develop and use + not specialized by position; one form for all workers - high potential for bias and rating errors - not very useful for feedback or development - not easily justifiable for reward/promotion decisions 2. JOB BEHAVIOR AND ACTIVITY + can focus on specific duties listed in the job description + intuitively acceptable to employees and superiors + useful for providing feedback + seem fair for reward and promotion decisions - are time consuming to develop and use - can be costly to develop - have some potential for rating error and bias

THREE FOCAL POINTS OF APPRAISAL CONTD

3. WORK RESULTS AND OUTCOMES + less subjectivity bias + acceptable to employees and superiors + links individual performance to organizational objectives + seem fair for reward and promotion decisions - are time consuming to develop and use - may encourage a short-term perspective - may use deficient or inappropriate criteria

Traits
Certain employee traits such as attitude, appearance, and initiative are the basis for some evaluations May be either unrelated to job performance or difficult to define Certain traits may relate to job performance and, if this connection is established, using them may be appropriate

Caution on Traits: Wade v. Mississippi Cooperative Extension Service

In a performance appraisal system, general characteristics such as leadership, public acceptance, attitude toward people, appearance and grooming, personal conduct, outlook on life, ethical habits, resourcefulness, capacity for growth, mental alertness, loyalty to organization are susceptible to partiality and to the personal taste, whim, or fancy of the evaluator as well as patently subjective in form and obviously susceptible to completely subjective treatment by those conducting the appraisals.

APPRAISAL METHODS
NARRATIVES
ESSAYS CRITICAL INCIDENTS

RANKING COMPARISONS
ALTERNATION PAIRED COMPARISONS

CHECKLISTS
SIMPLE WEIGHTED

RATING SCALES
GRAPHIC RATING SCALES BEHAVIORALLY ANCHORED RATING SCALES (BARS) BEHAVIORAL OBSERVATION SCALES (BOS)

OBJECTIVE MEASURES
NATURAL COUNTS (Quantity produced, etc) GOALSETTING STANDARDS (MBO, etc)

MANAGEMENT BY OBJECTIVES
BENEFITS A basis for effective organizational planning and control Improves communication and feedback with the supervisor Encourages participation and joint decision-making Facilitates role clarification by revealing assessment criteria

PROBLEMS Are the really important (key) areas of the job included? Is the process participative or are goals set for the worker? Can the worker truly control the outcomes s/he achieves? Overemphasizes quantitative, short-term, individual objectives

GOALSETTING ISSUES
GOAL DIFFICULTY How challenging should the work objectives be? I want an easy goal, but the organization wants me to stretch. ACCEPTANCE Will workers feel committed to work toward objectives that have been assigned to them, rather than those set participatively? SPECIFICITY Precise quantitative indicators may not exist for critical elements of the job. General, open-ended goals are not easily assessed. MOTIVATION Objectives should be challenging, yet reachable. They also need to be linked to desirable rewards to successfully motivate workers.

Conducting the Performance Review

A special time should be set for formal discussion of employees performance Withholding appraisal results is absurd Performance review allows them to detect any errors or omissions in appraisal, or employee may simply disagree with evaluation and want to challenge it

Due Process
Provide employees opportunity to appeal appraisal results Must have procedure for pursuing grievances and having them addressed objectively

Legal Implications
Employers must prepare for more discrimination lawsuits and jury trials related to performance appraisals Unlikely that any appraisal system will be immune to legal challenge

Courts Normally Require

Either absence of adverse impact on members of protected classes or validation of process. System that prevents one manager from directing or controlling a subordinates career. Appraisal should be reviewed and approved by someone or some group in organization. Rater, or raters, must have personal knowledge of employees job performance. Must use predetermined criteria that limits managers discretion.

The Appraisal Interview

Achilles heel of entire evaluation process Scheduling interview Interview structure Use of praise and criticism Employees role Use of software Concluding interview

Interview Structure
Discuss employees performance Assist employee in setting goals and personal development plans for next appraisal period Suggesting means for achieving established goals, including support from manager and firm

Conducting Separate Interviews

There is merit in conducting separate interviews for discussing (1) employee performance and development and (2) pay When the topic of pay emerges in interview, it tends to dominate conversation with performance improvement taking a back seat

Use of Praise and Criticism

Praise is appropriate when warranted Criticism, even if warranted, is especially difficult to give Constructive criticism is often not perceived that way

Employees Role
Should go through diary or files and make notes of every project worked on, regardless of whether they were successful or not Information should be on appraising managers desk well before review

Concluding the Interview

Ideally, employees will leave interview with positive feelings about management, company, job, and themselves Cannot change past behavior, future performance is another matter Should end with specific and mutually agreed upon plans for employees development

SUMMARY GUIDELINES FOR APPRAISALS

1. Appraisal standards are job related -- based on job analysis 2. Standards are clearly communicated to employees in advance 3. Standards are responsive to actual worker behavior or effort 4. Activities performed and results achieved are both appraised 5. Acceptable vs. unacceptable results can clearly be discerned 6. Appraisal criteria are consistently applied 7. Raters are able to consistently observe work performance 8. Raters are trained in appraisal and how to feedback results 9. Developmental feedback is separated from judgmental appraisal 10. An appeal process exists to resolve (judgmental) rating disputes